Humana says it's also bracing for medical costs to rise this year

UPDATED June 16 at 1 p.m.

Humana echoed comments made earlier this week by top brass at UnitedHealth Group, warning in a new filing that it's expecting higher care use this year.

The Medicare Advantage insurer said in a filing with the Securities and Exchange Commission that is expecting its benefit expense ratio to land at the higher end of its guidance for the year, which was between 86.3% and 87.3%. The insurer said this trend is driven by "higher than expected" utilization in outpatient services, including emergency care, surgeries and dental services.

Humana added that it has also continued to see high enrollment in its MA plans, including more age-ins than expected. These members "tend to run a higher benefit expense ratio than the average new member," according to the filing.

"At this time, the Company assumes it will continue to experience moderately higher-than-expected trends for the remainder of the year, which will be offset by a variety of factors, including higher-than-expected favorable prior year development, additional administrative expense reductions, higher than previously anticipated investment income and other business outperformance," Humana said.

Though major insurers' shares did rally after a decline on Wednesday following UnitedHealth's comments, Humana was down by about 4% as of 2 p.m. Friday. 

Insurance giant UnitedHealth Group's stock was down Wednesday after executives warned that higher medical costs are likely for the second quarter.

Top brass at the company spoke at the Goldman Sachs Global Healthcare Conference and said utilization is rising for outpatient services, which suggests patients are getting procedures they have been pushing off. Chief Financial Officer John Rex said that inpatient services, meanwhile, are "pretty controlled," with utilization on par or below 2022.

Rex said that UnitedHealth's Optum unit has also seen an increase in behavioral health care use.

The company reported a medical loss ratio of 82.2% in the first quarter of this year, compared to 82% for 2022. It projects a medical loss ratio of between 82.1% and 83.1% for the full year 2023 and expects to be near the top of that guidance for the second quarter, if not above.

"You would expect a Q2 medical care ratio to be somewhere in the zone of probably the upper bound or moderately above the upper bound of our full-year outlook," he said.

The comments led to a 7% decline in UHG's stock price Wednesday, and the company was trading at $456.21 per share as of about 12:45 p.m. The news also drove down other insurers' stock prices, with Humana down by nearly 12% and Centene and Elevance Health down by about 7%.

Rivals Cigna and CVS Health were down by about 4% and 6%, respectively, in the early afternoon Wednesday.

UnitedHealth's execs said they expect these utilization trends to continue through the year as more people seek services they delayed during the pandemic. Rex said the company is likely to see its medical loss ratio land in the upper half of its projected range for the full year.

"The great thing is seniors are getting access to care," he added.